The recently introduced expat quota Bill in Kuwait’s National Legislative has caused some buzz in India, especially after several media reports suggested that if the Bill was made law, it would force about 800,000 Indians to leave the small West Asian country. The Bill has been doing the rounds for a few years now and while it is not sure what will be its fate, it is important to understand what is at stake here.
India-Kuwait ties have always had a significant economic and trade dimension. In recent years it has also diversified to include culture, science, and technology, civil aviation, and youth affairs.
India has consistently been among the top trading partners of Kuwait. Kuwait has been a reliable supplier of crude oil to India. During 2017-18, Kuwait was the ninth largest oil supplier to India, and it meets about 4.63 percent of India’s energy needs. Bilateral trade with Kuwait during 2016-17 was $5.9 billion, and in 2017-18 it went up to $8.53 billion. In FY19 it grew by 2.7 percent growth to $8.76 billion: while Indian exports were $1.33 billion, imports were $7.43 billion.
Exports from India include food items, textiles, electrical and engineering equipment, ceramics, automobiles, chemicals, jewellery, metal products, etc.
Importantly, Kuwait is one of the top sources of remittances for India. According to the Ministry of External Affairs data, in 2018, India received $4.8 billion as remittances from Kuwait. According to the Reserve Bank of India, 58.7 percent of total remittances was received by four states: Kerala, Maharashtra, Karnataka and Tamil Nadu.
The flow of remittances broadly mirrors the state-wise composition of overseas migrants. The southern states dominated with a combined share of 46 percent in total remittances.
The migration to West Asia has continued to rise and has reached approximately 8 million—almost a million in this is in Kuwait. The Indian diaspora in Kuwait has played a very significant role in converting the desert nation into a modern luxurious welfare state filling the nation’s skyline with skyscrapers, constructing and operating huge power stations having the capacity to produce 12,000 MW, and millions of cubic meters of potable water distilled from seawater.
According to the Indian Embassy in Kuwait, 28,000 Indians are working in various government jobs such as nurses, engineers and a few also work as scientists. However, the majority of Indians (523,000) are employed in the private sector There are about 116,000 dependents, out of which 60,000 are the students studying in Indian schools in Kuwait.
There was a time when a small percentage of migrants constituted professionals and others mostly were into menial blue-collar jobs, nicknamed as ABCs-Ayahs-Butlers-Clerks. Today, most of the migrant workers are professionals, engineers, medical doctors, graduate nurses, accountants, and specialists in their respective fields of work. Although Kuwaitis generally nurture a dislike towards migrant workers, Indians are the most respected and loved community for their hard work and loyalty.
Indian companies in Kuwait have been a source of employment for many, expats and locals alike. Some of the major Indian PSUs, such as TCIL, LIC (International), LIC Housing Finance, New India Assurance Company, Oriental Insurance Company, Air India Ltd., have offices in Kuwait. In the last two years, Indian EPC companies such as Larsen & Toubro, Shapoorji Pallonji, Punj Lloyd, among others have been awarded contracts worth over $6 billion in Kuwait.
On the other hand, Kuwaiti companies have also made investments in India. The total estimated investment in India is over $3.5 billion, of which approximately $3 billion is by the Kuwait Investment Authority (KIA). Some of the other major investments are made by Alghanim Group of Kuwait, the KAPICO group, National Aviation Services, Agility Logistics, Hasibat Holding Co, Global Investment House, and Kuwait Finance House.
In early April, the COVID-19 outbreak presented itself as an opportunity to reaffirm the friendly ties. Following the request of the Kuwaiti government, New Delhi sent a COVID-19 Response Task Force for assisting in testing and treatment of the affected people and training of personnel. The task force comprised of 15 healthcare professionals, including doctors, and India also bolstered the supply of medicines to West Asia.
However, Kuwait’s draft expat quota Bill may hit India hard in the short term with more than 800,000 returnee migrants to look after and a resultant loss of remittances. In the long run, Kuwait will most likely feel the heat of losing a huge chunk of working migrant population, which filled the labour and skill gap in the oil-dependent economy looking to diversify.
This article was published in Money Control on July 14, 2020. Click here to read
Views expressed by the author are personal and need not reflect or represent the views of Centre for Public Policy Research.